After stalling this summer, a bill establishing a new agency affecting financial advertisers is back on track. Ad industry groups argue that the bill, which would create a Consumer Financial Protection Agency, could cause confusion for marketers promoting financial products and services –particularly when running national campaigns. The bill passed the Financial Services Committee Thursday.
In July, a coalition of trade groups including the Interactive Advertising Bureau, American Association of Advertising Agencies, and Association of National Advertisers, complained that the scope of the legislation was too broad, “granting unprecedented power and authority to a new agency with very few checks on that agency’s power.”
Among the concerns at the time was that the creation of the new agency could diminish the Federal Trade Commission’s consumer protection authority over financial companies. Now, at least one ad trade group is worried that amendments made to the bill last week could actually empower the FTC.
The Association of National Advertisers (ANA) argues the amended bill makes it easier for the commission to make rulings that could affect whole industries. Put simply, the amendments remove what the FTC considers to be cumbersome restrictions on its ability to make rules affecting all industries in a timely manner. Because of these restrictions, the FTC has typically chosen not to make rules unless empowered to do so by Congress under specific circumstances.
Consumer advocates think groups like the ANA want the FTC to lose power. “The ad lobby is working to weaken the proposed legislation [in the Consumer Financial Protection Agency bill] that would strengthen the ability of the FTC to protect consumers,” Center for Digital Democracy Executive Director Jeff Chester told ClickZ News. “Advertisers are clearly fearful that the newly reawakened FTC will become a more effective consumer watchdog, especially in the areas of online advertising as well as youth marketing,” he added.
Its opposition to the amendments, contended Dan Jaffe, executive VP for the ANA, “is not to hamstring the FTC, but to make it thoughtful; a thoughtful agency doesn’t mean a weak agency.” He added, “We do not want to shackle the FTC.”
Indeed, Jaffe said if the ANA and most other advertising trade groups had their way, the CFPA would not be established at all, meaning the FTC would retain its current authority over financial product and services advertising.
“We think the ideal situation is for the FTC to maintain its authorities,” Jaffe said.
Also worrisome to advertisers is the potential creation of new rules regulating financial ad practices, while conflicting state laws remain intact. According to the bill, the new agency could only preempt state consumer financial protection laws under limited circumstances.
If the federal regulations are inconsistent with state laws, argued Jaffe, “How can you have a national [ad] campaign?”
As the bill makes its way to the House floor, Jaffe thinks legislators are not paying enough attention to industry groups’ concerns. “This is moving very fast. There is a desire to gel action on the hill,” he said, adding, “Considering the size and magnitude of this legislation, there have been far less hearings [than one would expect].”
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